Surging oil prices
have fueled calls for the United States to develop new sources of affordable
and secure domestic energy. While renewable energy – especially biofluels,
wind power, and solar technologies – is an area of particular interest,
researchers from the Earth Institute at Columbia University say that the
U.S.
already has relatively low-cost alternatives to imported oil, including
coal. These resources can be extracted and used at a lower cost to the
environment than some might expect.
In a report published
in the most recent issue of Brookings Papers on Economic Activity, Klaus S.
Lackner and Jeffrey D. Sachs argue that “coal alone could satisfy the
country’s energy needs of the twenty-first century.” They say that “coal
liquefaction or the process of deriving liquid fuels from coal, is already
being used in places and with expanded infrastructure could provide
gasoline, diesel fuel and jet fuel at levels well below current prices.”
 Sachs and Lackner make
a case that because the U.S. has large coal deposits -- the most extensive
in the world -- it would be less vulnerable to political uncertainties in
other parts of the world.
The United States sits
atop 27 percent of the world’s reserves of coal. Ninety percent of the coal
produced in the country is used to generate electricity.
“Half the U.S.
electric grid today is powered by coal,” says James Rollyson, a coal
industry analyst in the Houston office of Raymond James Financial Inc. “It’s
still the cheapest fuel. We have a lot of it. We don’t have to import it.
And it can be used relatively cleanly, so why wouldn’t you use it?”
In a 2006 report,
Kiplinger’s Personal Finance called coal “the new black gold,” noting that
the stock price of U.S. coal producers has left major oil companies in the
dust despite record oil and gas prices. ExxonMobil Corp.’s shares, for
example, gained 37 percent between 2004 and 2006, while shares of St.
Louis-based Peabody Energy Corp. -- the largest coal producer in the world
-- quadrupled.
Kiplinger’s also
singled out Houston-based Natural Resource Partners LP. Although not a coal
producer, the company makes its money from royalties on coal produced from
land it owns. NRP’s dividends have increased for 11 straight quarters.
Even so, he says, “The
economic picture indicates that coal will work to fill the gap as a utility
fuel for the next 20 to 30 years. And it can be turned into clean liquid
fuels, too, which are the equivalent of natural gas and are competitive at
today’s gas prices. This will drive the demand for coal. Electricity
consumption in the United States is projected to grow 44 percent by 2020.
Coal has enabled America’s electric utilities to keep up with this
increasing demand. The use of coal for generating electricity has nearly
tripled in the last 30 years.
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U.S. coal facts |
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The United States has
the largest coal reserves in the world -- more than 27 percent of the
world’s known supply. |
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Ninety percent of coal
produced is used in electricity generation. |
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Coal fuels more than
50 percent of all electricity generated, with nuclear power accounting
for 20 percent and natural gas for 18 percent. |
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There are 275 billion
tons of recoverable coal reserves, enough to last 250 years. |
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Annual demand for coal
is 300 million tons. In 2005, a record 1.13 billion tons of coal was
produced. |
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Projection: 87
gigawatts of new coal-fueled generation facilities will be constructed
by 2025.
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Coal provides an
attractive energy source as it is: |
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Abundant-many
countries have extensive reserves of coal; it is mined in more than 50
countries. |
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Safe-coal is stable
and the safest fossil fuel to transport, store and use. |
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Secure-coal users are
guaranteed security of supply at competitive prices due to abundant
reserves; hence electricity supplies for industrial and domestic use are
assured. |
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Clean-coal can now be
burnt cleanly throughout the world using current technologies. |
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Cost-effective-globally, coal is a competitive fuel for the generation
of electricity and is the major energy source for power generation.
Without coal, modern life would be virtually impossible. |
Sources: U.S. Energy Information Administration & Noble
Royalties, Inc.; May 2007
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